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> In practice there is surprisingly little connection between how much a startup spends and how fast it grows. When a startup grows fast it's usually because th

> In practice there is surprisingly little connection between how much a startup spends and how fast it grows. When a startup grows fast it's usually because the product hits a nerve, in the sense of hitting some big need straight on. Perhaps the most important underlying point in the article. It's easy to think that more people will make the company grow faster. Adding people actually makes it harder to tune a product's direction (and thus growth rate). Great to see another dense and on-point post from pg. Every sentence is worth several reads.

mooreds 11y ago
I think that having more people also makes it harder to focus. When it is just one or two folks, you have to ruthlessly prioritize. I am working on a side project and we are at the point that I only want to do things that either bring in money or extend our reach (in terms of data). Because it is a side project, it is hard to be ruthless, but it feel it's what is needed. The pressure on a full time founder must be 10x or100x what I feel.
roasm 11y ago
Well, this is mostly only true of the high margin, hoping-for-viral-growth so loved by the internet VCs. There are a ton of highly profitable, relatively low margin businesses (at least compared to internet services), like consulting or something with high sales effort, like enterprise products. In those cases, you can easily imagine your growth limited by, and accelerated by, your ability to hire and grow the right talent.
- paulsutter 11y ago
  VCs aren't merely hoping for hypergrowth, their business model demands it. The results for any given VC fund are dominated by 1 to 3 hypergrowth companies. Therefore, hypergrowth companies should be their sole focus. You're right that consulting companies can be great businesses. A friend of mine sold a 5 year old consulting company for a good tens of millions last year. That's a stellar result for the founders. But few consulting companies are within a VC's "strike zone".
pbreit 11y ago
Except some smart people like Keith Rabois would disagree.

mooreds 11y ago

I think that having more people also makes it harder to focus. When it is just one or two folks, you have to ruthlessly prioritize. I am working on a side project and we are at the point that I only want to do things that either bring in money or extend our reach (in terms of data). Because it is a side project, it is hard to be ruthless, but it feel it's what is needed. The pressure on a full time founder must be 10x or100x what I feel.

roasm 11y ago

Well, this is mostly only true of the high margin, hoping-for-viral-growth so loved by the internet VCs. There are a ton of highly profitable, relatively low margin businesses (at least compared to internet services), like consulting or something with high sales effort, like enterprise products. In those cases, you can easily imagine your growth limited by, and accelerated by, your ability to hire and grow the right talent.

paulsutter 11y ago
VCs aren't merely hoping for hypergrowth, their business model demands it. The results for any given VC fund are dominated by 1 to 3 hypergrowth companies. Therefore, hypergrowth companies should be their sole focus. You're right that consulting companies can be great businesses. A friend of mine sold a 5 year old consulting company for a good tens of millions last year. That's a stellar result for the founders. But few consulting companies are within a VC's "strike zone".

pbreit 11y ago

Except some smart people like Keith Rabois would disagree.